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Sistema Shyam Teleservices (SSTL) which operates in India as MTS India, saw a significant 26% decline in in its data card subscribers for the quarter – registering 1.16 million subscribers for the quarter ending June 30, 2013 (Q2 2013).

The company attributed this decline to the reduction in the number of its operational circles. Sistema had shut down its operations in 10 telecom circles in February 2013 and shut down its operations in additional three circles in the following month. SSTL noted that this was the first quarter after the transition to nine operational circles.

SSTL said that data card subscriber base declined by only 1.7% in nine operational telecom circles, due to subscriber base clean up and its active subscriber base continues to grow, although SSTL didn’t disclose any specific numbers on the active subscribers.

Non-voice revenues which includes data and VAS revenues, was at Rs 100.1 crore for the quarter, down 20% from Rs 125.5 crore revenues in the previous quarter. Non-voice revenues accounted for 34.4% of the total quarterly revenues, down from 35.7% in the previous quarter.

Highlights

– Blended mobile ARPU increased by 9% to Rs 89 for the quarter, up from Rs 81 in the previous quarter. The company attributed this increase to elimination of the impact caused by lower ARPU (Average Revenue Per User) from the circles it exited earlier this year.

– Minutes of Use increased to 328 million minutes for the quarter, up 11% from 295 million minutes reported in the previous quarter.

– SSTL reported a total mobile subscriber base of 9.8 million customers for the quarter ending June 30, 2012, a 19% decline from 11.92 million customers in the previous quarter. Sistema is currently operational in 9 of the 22 telecom circles in India, which includes the eight circles where it secured spectrum in the March spectrum auctions and Rajasthan circle which was not affected by the landmark Supreme Court judgment last year. The company claimed that it has been able to retain around 73% of its pre-auction wireless subscribers.

– During the quarter, SSTL launched (pdf) a dual SIM Android smartphone called MTS Duet, which runs on MTS’s MBlaze network and supports both CDMA and GSM technologies. The phone is priced at Rs 4,799 and consumers can do a first recharge of Rs 599 to get unlimited local calls talktime and unlimited mobile Internet service for first two months.

-SSTL rolled out its CDMA EV-DO Rev.B Phase II network in four additional cities in Rajasthan, which includes Bhiwadi, Jodhpur, Kota and Udaipur and is currently available in five cities including Jaipur, where it rolled out the network in September 2011.

– SSTL’s high speed data services is now available in 450 towns across nine circles.

The results announcement quotes SSTL CEO Dmitry Shukov as saying that “SSTL during the quarter focused on further optimizing its operations after the finalization of its 9 circle footprint in March 2013. We continue to invest in our business to further strengthen our data offerings. On the regulatory front, 100% FDI in telecom is a welcome move, however a lot more needs to be done to bring further investments in the sector. We are hopeful that the government will do its best to bring back investor confidence”.

Financials

– Consolidated Revenues declined 17% quarter-on-quarter (QoQ) to Rs 290.2 crore, down from Rs 352 crore in the previous quarter. The company attributed this decline largely to the closing down of its operations in 13 circles.

– Net loss increased 31% QoQ to Rs 844.7 crore for the quarter, up from Rs 643.9 crore loss in the previous quarter.

– SSTL made investments of Rs 15.4 crore during the quarter while the debt from banks and financial institutions at the end of March 31, 2013 stood at Rs 4,187 crore.

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